MTA committee eyes wholesale, other issues
Pub Date: 7/1/2008
Beer wholesaler practices, fantasy sports pari-mutuel wagering, mandatory server training and increasing gaming machine volatility were all on the agenda of the Montana Tavern Association Legislative and Gambling Committee when it convened at Jorgenson's Inn in Helena June 4 at 10 a.m.
Committee chairman Pat Kelly gavelled the meeting to order, determined a quorum was present, then handed the discussion lead off to MTA Government Affairs Counsel Mark Staples who, in turn, called upon board member Bob Miller of McAllister to describe an issue he's encountered with his beer wholesalers in southwest Montana.
Miller said apparently heightened competition between wholesalers in his area had led to decreasing flexibility in payment policies.
He said he feared increasingly rigid practices and legal applications could spread to other beer wholesale franchise territories, and could expand into other areas of the retailer/wholesaler relationship.
Tom Heisler reminded the board of the purpose of the prompt pay policy - that years ago some wholesalers would allow retailers to get into debt, then would effectively take control of the retail location in contravention of the intent of the three-tier system, which is to maintain separation between producers, distributors and retailers and prevent a recurrence of vertical integration and the related historical abuses that occurred prior to Prohibition.
Staples pointed out that the entire system of alcohol production, distribution, sales and consumption is about control. He said he thought the sometimes harsh effects from the keen competition between wholesalers could be mitigated through conversations between MTA representatives and beer wholesalers, and a consequent adoption of a reasonable approach to making sure practices are functional and serve the needs of retail customers as well as wholesalers and the public.
Miller also pointed out that small retailers are being charged fuel surcharges on their beer deliveries, while apparently larger retailers are not. He said he understood the justification for the surcharges, but thought they ought to be applied equally, regardless of the size of the retail account.
Tanya Harper of Cut Bank noted Great Falls retailers are not paying a fuel surcharge to Great Falls distributors, but that outlying retail accounts were.
Heisler once again addressed the historical aspects of the alcohol control system and asked retailers to keep in mind the valuable service and convenience beer distributors provide.
Staples told the committee that an earlier notion floated by the Montana Petroleum Marketers Association (convenience stores) to require mandatory server training was still bneing worked on.
Moving down the agenda, Staples told the committee the fantasy sports pari-mutuel wagering game allowed under HB616 passed by the last Legislature was apparently going to be conducted by the State Lottery.
He noted his instruction from the MTA board had been to assure the game was available to all licensed establishments and only in licensed establishments and that was evidently going to be the case.
To implement and offer the game, it appears the Lottery envisions a typical lottery terminal that would require a service attendant to assist ticket purchasers and is contemplating requiring anyone licensed for the fantasy sports game to also offer the full array of Lottery products.
ples said he had heard from some licensees that these requirements would be onerous and might affect the ultimate viability of the game. The exact format of the game or rules governing it are unclear at this time. Also, the four percent of total game revenues allowed for the hosting premise was thought by some to be too low.
The committee recommended Staples approach the authorities in good faith and advise them of what some perceive to be serious flaws in the game as currently contemplated.
A proposal from Big Sky Brewing for legislation was briefly discussed, but because the committee's agenda was already extensive, it was decided to invite a Big Sky Brewing representative to the MTA convention in September to explain that their positions, and to hear the concerns of tavern operators who are worried about the erosion of the three-tier system of alcohol control, where producers, wholesalers and retailers are to operate separately and independently of one another.
Committee chairman Kelly then initiated a discussion on the Gaming Advisory Council's deliberations of the "negative gaming tax" which occurs when a gaming machine has lost money for the reporting period and the loss is not allowed to be balanced against machines that operated in the black, nor is the loss allowed to be carried forward into the next reporting period.
Kelly said increasingly volatile games which can produce more big winners are exacerbating the negative tax problem. It was noted some machine manufacturers are now offering game suites with less of the volatility often seen in games with low play volumes and generous bonus round multipliers.
"The location licensee needs to decide which game versions to run'; not the vendor or the manufacturer," said one member.
It was noted the Gaming Industry Association (GIA) had recently covered the topic and asked its representatives to work with other associations in the Montana Gaming Research and Education Fund. MTA member Jim Grubbs suggested MTA form a study committee and Kelly named Vince Kyle, Gordy Kiedrowski, Mike Kenneally and others to form a committee.
With that, the MTA Legislative and Gambling Committee adjourned for lunch and a later gathering of the full board.
Source: The Montana Tavern Times, July, 2008, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.